Each year, Americans pay approximately $15 billion in credit card penalty fees. Some reform measures effective today are expected to shield consumers from unfair or deceptive practices and help them keep more money in their pockets.

Under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act signed by President Obama in May 2009, banks will be required to more clearly spell out contract terms and will end some practices that have allowed card issuers to cash in on fees from late payments, exceeding credit limits and other penalties.

“With today’s implementation of new rules, we are taking a critical step forward in our effort to protect American families by prohibiting the use of unfair retroactive rate hikes and late fee and over-limit fee traps by credit card companies,” Treasury Secretary Timothy Geithner said in a press release. The act provides “clear, fair rules of the road that will help (families) understand what they are getting into when they sign up for a card and how much they pay to use it,” he said.

The act prohibits banks from raising rates on existing card balances due to “any time, any reason” or “universal default” language, and severely restricts retroactive rate increases due to late payments.

It also requires card issuers to clearly spell out contract terms that remain stable for the entire first year, and requires that promotional rates must be clearly spelled out and last at least six months. The act also ends late fee traps such as weekend deadlines, due dates that change each month and deadlines that fall in the middle of the day.

Provisions also effective today:

– Fair interest calculation: Credit card companies will be required to apply excess payments to the highest interest balance first, as consumers expect them to do. The act also ends the confusing and unfair practice by which issuers use the balance in a previous month to calculate interest charges on the current month, so called “double-cycle” billing.

– Opt-in to over-limit fees: Consumers will find it easier to avoid over-limit fees because institutions will have to obtain a consumer’s permission to process transactions that would place the account over the limit.

– Sub-prime fees: Fees on sub-prime, low-limit credit cards will be substantially restricted.

– Fees on gift and stored value cards: The act enhances disclosure on fees for gift and stored value cards and restricts inactivity fees unless the card has been inactive for at least 12 months.

For a more complete description of the provisions of the act, click here.